Most studies report a positive relationship of work engagement with health and job performance, but, occasionally, a "dark side of engagement" has also been uncovered. The current study examined two hypotheses: whether work engagement has (1) a U-shaped curvilinear relation with psychological distress and (2) an inverted U-shaped curvilinear relation with job performance (i.e., in-role performance and creative behavior). A two-wave longitudinal Internet survey with a time lag of seven months was conducted among 1,967 Japanese employees. To test our hypotheses, we used a two-wave panel design and examined the lagged and concurrent relations between work engagement and both outcomes. The results confirmed that work engagement had a curvilinear relation with psychological distress concurrently; a favorable effect was found initially, but this disappeared at intermediate levels of work engagement, and, at higher levels, an adverse effect became prominent. In addition, work engagement had a curvilinear relation with in-role performance both concurrently and longitudinally; the higher the levels of work engagement, the stronger the favorable effects on in-role performance. However, contrary to our expectations, work engagement had a linear relation with psychological distress longitudinally and with creative behavior both concurrently and longitudinally. Hence, our results suggest that work engagement plays a different role in health enhancement compared to performance enhancement. Leveling-off and adverse effects of high work engagement were observed for psychological distress in the short and not in a long run. In contrast, no leveling-off effect of high work engagement was observed for job performance. Thus, except for the short-term effect on psychological distress, no dark side of work engagement was observed for psychological distress and job performance.